Types of Identity Theft – What Are They and How Do They Work?

EPF Last Update: September 28, 2018

Identity captors are all around you — in fact, they surround you. And it’s just a matter of time before you become one of the many millions of American identity theft victims. You can try all you want to stay safe, but these criminals will always find new ways to steal your identity.

Your best shot at thwarting a fraudsters attempt to defraud you is by staying educated on how identity thieves work. The angles they take are much of the same, so blocking their attack involves following basic identity theft safety tips.

The ways to go about preventing will vary depending on the method of attack, so it’s important to address all identity theft types.

Each of the types of identity theft below are specific methods of approach that criminals use to defraud you through identity crimes. Read up more on all the different types on our site before you take initiative and put up safety barriers!

What are the Different Types of Identity Theft?

While there are endless classifications for the types of identity theft methods that exist, you can still categorize most identity crimes based on the below labels.

Business

Celebrity

Criminal

Data Breach

Medical

Social Engineering

Social Security Number

Synthetic

Tax Return

Each type is unique, though all are potential threats under the right circumstances. You should read up on our identity theft type guides to better understand how each method works. By doing so, you will have all the information necessary to minimize your chances of becoming an identity theft victim.

With that said, here’s a simplified view of each of the identity theft types listed above.

Business Identity Theft

Businesses are especially at risk of identity theft because their information is out in the open. In fact, tax return fraud usually works by using a business’s EIN number without their knowledge. Once a business finds out they have become a victim, it’s hard to understand what comes next. That said, there is a process in place and there are actually some effective ways to prevent the damage in the first place!

Here are some other examples of business identity theft:

The business owner’s information is used to open new credit lines,

The company’s information is used to open new credit accounts, or

The company’s identity is forged to defraud others.

That’s not the full extent of business identity theft; in any event, do not mistaken business and data breach identity theft — the two are completely separate types.

Celebrity Identity Theft

Celebrities frequently get their identities stolen, and a big part of this is the lack of privacy they receive. It’s acceptable by law to discuss the lives of famous people, hence how businesses like TMZ (living off celeb gossip) stay afloat. As such, there is no lack of disclosure when it comes to talking about sensitive information.

A criminal might be able to find information about a celebrity online, in their autobiography, or even on their reality TV show. There are endless ways they might gather the personal identifying information they need. As such, celebrities take extra precaution to keep their identity safe and information private.

While you might not be a celebrity, you can learn a lot from one. These are people who have deep pockets, yet they still entrust companies to keep their identities safe. The steps they take to protect themselves are also much of the same; by approaching like a celeb, your slight ‘paranoia’ will result in an all-too-perfect prevention approach.

Criminal Identity Theft

Sometimes a criminal really plans smart, to the point where they have identities to use if they ever get caught for a crime. By impostering the unsuspecting victim, they can keep safe from criminal charges on their own record. This often involves misdemeanors, traffic violations, and other petty crimes. As the victim, you end up having to prove your innocence and sometimes you do not find out until after your wrongful arrest.

Some other situations where criminal identity theft can occur include:

Data Breach Identity Theft

If there was ever a reason to justify that identity theft can happen to everyone, data breaches would be that reason. This is because anyone and everyone can become an identity theft victim this way.

To put it simple, databases have security vulnerabilities. Some are manmade, such as in ‘inside job’ scenarios where an employee uses their privileges to obtain access to the database. Others involve more lucrative intrusion techniques, and often leaving a trail through a technological footprint.

Regardless, there are various databases that could hold information about you. It’s not just the retail payment systems that you have to worry about. Although, the more-than 80 million Target customers/victims speak volumes for the risk of retail data breaches.

Some examples of businesses and entities that contain sensitive information about you include:

Your state’s DMV,

Your state’s health department,

Your doctor’s office,

Your local hospital,

Your insurance provider, and,

Anywhere you shop online!

As a potential target, your goal should be to only allow your information to make it to the necessary databases.

You cannot avoid getting a driver’s license due to identity theft concerns, and you also have no control over how healthcare professionals handle your medical records.!

Medical Identity Theft

Medical identity theft is a serious concern, because everyone has their information in their medical records. It stems from the risk of such information getting compromised through a data breach.

By just factoring four of the largest medical database compromises in the past year, the personal information of close to 30 million victims was affected. While there could be some individuals that were victimized more than once, this number still makes up for almost a tenth of the American population.

There are still other ways a medical identity theft situation could play out. For example, a rogue healthcare professional could note a patient’s information to later abuse. As details like your home address, date of birth, and possibly your Social Security Number and/or insurance number get discussed, it’s certainly possible.

Social Engineering Identity Theft

Social engineering consists of working your way into someone’s brain through psychological tactics. This is often done with malicious intent, such as to gather sensitive information to steal one’s identity.

A common example of a social engineering technique is the granny scam. This involves a fraudster calling an elderly individual with the intent of defrauding them. For instance, they could call up pretending to be a grandchild who is in immediate need of funds to buy an emergency plane ticket. They could run the scheme further by handing the phone to an associate, who pretends to be an airline worker taking down their credit card information.

Social engineering identity theft is unique for the fact that no standard framework is in place. It’s an identity theft tactic that is effective as the creativity of the person behind it. If the identity thief is persuasive, even some of the more suspicious schemes will succeed.

Some of the many ways an identity thief could social engineer themselves into a victim’s identity include:

Impersonating an employee at a financial institution,

Sending a phishing link to friends on a hacked Facebook account,

Pushing for identity verification through text messages, and,

Getting an under-the-table house cleaning gig to steal sensitive paperwork.

Again, the possibilities are endless when dealing with social engineer identity theft tactics. It’s imperative to be as thoughtful as possible when dealing with businesses, entities, and their representatives. Elite Personal Finance’s guide to social engineering identity theft will give you better insight on how to handle social interactions without risking your identity.

Social Security Number Identity Theft

The most effective piece of information an identity thief can have is a Social Security Number. So long as it’s a real number, there does not even have to be an identity behind it. With synthetic identity theft techniques, an identity thief can take almost any Social Security Number and use it fraudulently for profit. Meanwhile, it puts any real victim in harm’s way and this is exactly why everyone is pressured to keep their Social Security Number private.

On it’s own, Social Security Number identity theft is classified as any type of identity crime that involves the victim’s Social Security Number. This makes it a label that could work for many different instances of identity theft. Yet, it is often a term used to describe the way the victim’s information was gathered in the first place.

You give your Social Security Number to many people — bank account managers, credit card issuers, employers, federal and state departments, and the police, among many others. It’s important you understand the implications behind such actions. While you are not at fault if your number gets revealed in a database hack, you are at fault if you remain ignorant to ways you are increasing your vulnerability to identity theft.

Synthetic Identity Theft

Most cases of identity theft involve fabricated identities, which often originate from a legitimate Social Security Number. The fraudster will force a credit file to open under a different name, but with a real number. In the end, the fake identity is used to defraud the real name’s credit trustworthiness; most of the time, the fraudster must first establish credit to pull off the fraud.

Synthetic identity theft not only makes up for the majority of identity crime cases, but it’s also something that could affect minors. In fact, identity thieves target people under the legal age in their area because they are less likely to have a borrowing history.

This means it just takes a single credit application with a real, not-yet-used Social Security Number to kick-start a report. From there, the identity thief could defraud the identity for many years before getting caught.

Elite Personal Finance’s guide to synthetic identity theft gives full detail on how this type of identity crime works. It’s very unique, and extremely dangerous — with just a little bit of information, a fraudster could take-over your identity. Yet, as we outline in our guide, there are ways to almost guarantee that synthetic identity theft will not affect you.

Tax Return Identity Theft

Tax return identity theft involves the fabrication of a tax return with the intent of stealing tax refunds. This is most commonly done by directly stealing an identity and filing as that person. In the course of three years, the Internal Revenue Service managed to block over 19 million seemingly fraudulent tax returns — valued in excess of $63 billion.

All it takes is having the wrong piece of mail stolen to become the victim of tax identity theft. This makes it extremely important to know what to do when filing your tax return. Further, you must know how to catch onto a tax return identity theft attempt before its too late.

A few interesting ways to combat tax return identity theft include:

By installing two-factor authorization when filing tax returns, done through the Internet Protection PIN made available to residents of D.C., Florida and Georgia,

By filing your tax return as soon as possible, which in return means there’s a much smaller chance that the fraudster sees any profit from the fraud, and,

By monitoring your credit report and Social Security statement for any fraudulent information getting posted in your name or under your SSN.

Elite Personal Finance’s guide to tax return identity theft will effectively show you how these fraudsters steal your information for the purpose of fabricating your tax return. For those that become victims, it can lead to a lot of stressful times ahead — but for even tax identity theft victims, our guide will show them that there is a bright light at the end of the tunnel.

How Can You Keep Your Identity Secure?

There is no one way that you can guarantee your identity stays safe from identity theft. That said, there are ways you can reduce your risks while also beefing up the security of your identity. It’s important to not only do all of the right things, but also avoid doing the wrong stuff. While easier said than done, learning how identity thieves work is the first step of the battle — next, you must change how you operate.

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